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Health Insurance Amendment (Compliance) Bill 2009

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2008-2009

 

 

 

THE PARLIAMENT OF THE COMMONWEATLH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Ageing,

the Hon Nicola Roxon, MP)





HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009

 

OUTLINE

 

This Bill will amend the Health Insurance Act 1973 to give effect to the Increased MBS Compliance Audits initiative which was announced in the 2008-09 Budget.

 

Expenditure on the Medicare scheme was over $14 billion in 2008-09.  Compliance audits are conducted to ensure that taxpayers’ money is spent appropriately.  At present, many practitioners voluntarily cooperate with Medicare Australia during a compliance audit.  However, around 20% of practitioners either do not respond to or refuse to cooperate with a request for documents and Medicare Australia does not have the authority to require the production of relevant documents.  This legislation is intended to address that deficiency. 

 

The Report of the Senate Community Affairs Legislation Committee Inquiry into Medicare Compliance Audits recommended that Regulations to ensure that patient clinical records are only required to be accessed where necessary during a compliance audit should be developed.  The Government has accepted the substance of the recommendation.  However given the concerns expressed during the hearing it is more appropriate to address this in the primary legislation.  Therefore the Bill will provide for significant involvement by medical practitioners employed by Medicare Australia in the compliance audit process. 

 

This Bill will enable the Chief Executive Officer (CEO) of Medicare Australia to give a notice requiring the production of documents to a practitioner, or another person who has custody, control or possession of the documents, to substantiate whether a Medicare benefit paid in respect of a service should have been paid.  However before a notice to produce documents can be given to a person the CEO must fulfil several conditions: 

 

  • Firstly, the CEO must have a reasonable concern that the Medicare benefit paid in respect of a service may exceed the amount that should have been paid.  A reasonable concern may be related to a particular practitioner, a group of practitioners or a particular service or groups of services.  For example, the use of a particular Medicare Benefits Schedule item may have grown so significantly or unexpectedly that the CEO can have a reasonable concern about the provision of any service associated with that item number.  The CEO may also have a concern about a professional service if it has been provided by a person who is a particular type of practitioner and the CEO has a concern about that specific group of practitioners.  

 

  • Secondly the CEO must take advice from a medical practitioner employed by Medicare Australia on potential sensitivities associated with the kinds of documents a practitioner may need to provide to substantiate the service.

 

  • Thirdly the CEO must give the person a reasonable opportunity to voluntarily respond to an audit request.  This means that practitioners who choose to voluntarily tell Medicare Australia that they have received a benefit that exceeds the amount they should have been paid will still benefit from discounts on any financial penalty that may apply.

 

Only when these three conditions are met can the CEO serve a notice under new section 129AAD requiring a person to produce documents to substantiate a Medicare benefit paid in respect of a service.

 

This legislation does not specify the actual document(s) that the person may need to produce in response to a notice.  It will be up to the person who receives the notice to decide what documents they have available to substantiate the service. 

 

However the request to produce documents must include a statement that documents containing clinical details do not have to be produced unless these are necessary to substantiate the service.  The Bill also includes a provision that a person is not required to produce documents containing clinical details to any employee who is not a medical practitioner employed by Medicare Australia.  Medicare Australia will have qualified medical practitioners available to receive documents in all audits.

 

In addition, Medicare Australia is working with relevant stakeholders, including the Australian Medical Association, to develop guidelines for practitioners on the kinds of information that will substantiate particular services or groups of services.  These guidelines will be publicly available and will emphasise that clinical information is not to be provided unless it is absolutely necessary to substantiate the service.

 

The provisions in this Bill do not commence until 1 January 2010 in order to allow for the development and publication of these guidelines.

 

The Bill provides protection for practitioners by providing that the documents and information about particular services provided in response to a notice cannot be used as the basis for a referral to Professional Services Review or for most criminal and civil proceedings.  This means that information relating to identified services produced in response to a notice to produce documents will not be able to be used in any other proceedings except for those relating to false and misleading statements under the Health Insurance Act 1973 .

 

The Bill ensures that practitioners will be notified of the outcome of an audit in which they were involved.  Where a practitioner is found to owe a debt to the Commonwealth, the Bill also introduces a requirement that they be given 28 days in which to seek internal review of the decision before a debt notice is issued.

 

At present, where the amount paid in respect of the service cannot be substantiated, the practitioner is required to repay the amount.  This will continue to occur.  In addition, this Bill provides that a practitioner who cannot substantiate the amount paid in respect of a service may also be liable for a financial administrative penalty.  A base penalty amount of 20 % will be applied to debts in excess of $2,500 or a higher amount if specified in regulations. 

 

An analysis of Medicare Australia data indicates that this threshold reflects the point at which mistaken claims may become routine, or reflective of poor administration or decision making In 2008-09, only 22% of practitioners who were found to have made incorrect claims were asked to make repayments of more than $2,500.  The threshold may be increased by regulations.  This provides for future adjustments of the threshold to ensure that practitioners are not disadvantaged by incremental increases in the value of the Medicare benefit amount paid in respect of services. 



The Bill allows the base penalty amount of 20% to be reduced or increased according to individual circumstances described in the legislation.  If a practitioner:

·          tells Medicare Australia that an incorrect amount has been paid in respect of the service prior to being contacted by the CEO, there is a 100% reduction in the penalty;

·          tells Medicare Australia that an incorrect amount has been paid in respect of the service before a notice to produce documents is issued, the penalty is reduced by 50%;

·          tells Medicare Australia that an incorrect amount has been paid in respect of the service after a notice to produce documents has been issued but before completion of the audit, the penalty is reduced by 25%;

·          does not respond to a notice to produce documents, the full amount of the services identified in the notice become repayable and the penalty is increased by 25%;

·          has been unable to substantiate an amount paid in respect of other services in the previous 24 months and the total they repaid was more than $30,000, the penalty in respect of the current amount which is being recovered is increased by 50%.

 

The Bill is not retrospective and will only apply to Medicare services provided after the commencement of the legislation on 1 January 2010.

 

This Bill forms part of the Government’s commitment to responsible economic management.

 

Financial Impact Statement

 

The implementation of IMCA will provide savings of $147.2 million over four years and will cost $76.9 million to administer, leading to net savings of $70.3 million over four years ( Budget Paper No.2 2008-09 Health and Ageing portfolio).

 

The budgeted annual costs, including the cost to Medicare Australia to increase the number of audits conducted and manage the program, are set out in the table below:

 

Expense ($m)

 

2008-09

2009-10

2010-11

2011-12

Medicare Australia

14.2

18.7

18.8

19.0

Department of Health and Ageing

-21.2

-42.2

-41.5

-42.4

Total

-6.9

-23.5

-22.7

-23.3

Related capital ($m)

Medicare Australia

 

6.2

 

 

 

 

 



HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009

 

NOTES ON CLAUSES

 

Clause 1:  Short Title

 

This clause provides that the Bill, once enacted, may be cited as the Health Insurance Amendment (Compliance) Act 2009.

 

Clause 2:  Commencement

 

The Bill will commence on 1 January 2010.

 

Clause 3: Schedule(s)

 

This clause provides that each Act that is specified in a Schedule to the Bill is amended or repealed as set out in the Schedule concerned.  Any other item in a Schedule has effect according to its terms.  The Bill contains one Schedule which amends the Health Insurance Act 1973 and provides applications and savings provisions.

 

Schedule 1 - Amendments to the Health Insurance Act 1973

 

Schedule 1 amends the Act to:

·          require persons who are given a notice under the Act to produce documents to substantiate a Medicare benefit amount paid in respect of a service;

·          require that before a notice to produce can be given under the Act the Medicare Australia CEO must have a reasonable concern, take advice from a medical practitioner employed by Medicare Australia about the types of documents that may be produced; and have given the person an opportunity to voluntarily respond to a request to produce relevant documents;

·          require Medicare Australia to inform individuals that documents containing clinical details should only be produced if necessary to substantiate a Medicare benefit paid in respect of a service;

·          provide that documents containing clinical details only need to be produced to a medical practitioner employed by Medicare Australia;

·          introduce a financial administrative penalty for practitioners who do not comply with a notice to produce documents or comply but are unable to substantiate Medicare benefit amounts above a certain threshold;

·          introduce a civil penalty for other persons who do not comply with a notice to produce documents to substantiate a service in respect of which a Medicare benefit amount has been paid; and

·          introduce an internal review process for practitioners who are found to owe a debt to the Commonwealth under existing section 129AC or new provisions 129AC(1A), (1C) and (1E).



Item 1: 

This item inserts a definition for medicare number into subsection 3(1).  It provides that the term will have the same meaning as in subsection 84(1) of the National Health Act 1953 that states:

"medicare number" means:

(a)    in relation to a particular person covered by a medicare card - the particular combination of numbers, or letters and numbers, on the card that is applicable only to that person as a person covered by that card; and

(b)    in relation to a person who the Medicare Australia CEO is satisfied is, or is entitled to be treated as, an eligible person within the meaning of the Health Insurance Act 1973 but who is not covered by a medicare card - the particular combination of numbers, or letters and numbers, that would be applicable to that person if that person were covered by a medicare card .

 

This is necessary as the notice to produce documents (new section 129AAD) which will be issued by the Medicare Australia CEO will identify the particular services which are being audited and will specify the Medicare number of the person who received that service (see subsection129AAD(8)).  

 

Item 2: 

Item 2 inserts into the Act, after section 129AAC, new sections 129AAD, 129AAE, 129AAF, 129AAG, 129AAH, 129AAI and 129AAJ.

 

Section 129AAD Notice to produce documents

 

Subsection 129AAD(1) applies this new section when the Medicare Australia CEO has:

(a)     a reasonable concern that an amount paid in respect of a service may have exceeded the amount that should have been paid; and

(b)    considered advice provided by an employee of Medicare Australia who is a medical practitioner about the types of documents that may contain information relevant the concern. 

 

The requirement for the CEO to have a reasonable concern is included to ensure that compliance audits are not conducted on a random basis.  Medicare Australia will use a range of sophisticated data analysis techniques as well as gathering information that is provided by members of the public in order to identify potential risks to the integrity of the Medicare scheme.  The reasonable concern developed by the CEO is based on this analysis work. 

 

The note under section 129AAD(1) describes the kinds of circumstances which might form the basis of a reasonable concern on which to conduct a compliance audit.  The CEO’s concern regarding a particular service does not need to be based on information about a specific service or a specific person.  For example, the use of a particular Medicare item may have grown so significantly or unexpectedly that the CEO can have a reasonable concern about the provision of any service associated with that item number.  The CEO may also have a concern about a professional service if it has been provided by a person who is a particular type of practitioner and the CEO has a concern about that specific group of practitioners.  

 

Subsection 129AAD(1)(b) provides that the CEO must take advice from an employee of Medicare Australia who is a qualified medical practitioner before a notice can be issued under 129AAD(2).  This provision will mean that a medical practitioner employed by Medicare Australia will consider the proposed audit and provide advice to the CEO on the kinds of documents a practitioner may need to provide to substantiate the service and any potential sensitivities associated with those documents. This will allow the CEO to consider the practicality, scope, sensitivity and details of the request to produce documents (including the potential relevance of documents containing clinical details).

 

Subsection 129AAD(2) provides that the notice to produce documents may be given to the practitioner who rendered the service or on whose behalf the service was rendered (paragraph (a)) or another person (paragraph (b)) who the CEO believes has custody, control or possession of documents relevant to ascertaining whether the amount paid in respect of the professional service should have been paid.  Paragraph 2(b) addresses situations where a third party has control of documents relevant to the professional service rendered by the practitioner (for example, corporate practices or hospitals that contract with individual practitioners).  It aims to encourage third parties to cooperate with an audit request so that practitioners who do not control the relevant documents are able to substantiate services.  It is also intended to discourage practitioners from establishing corporate structures in order to avoid compliance with a notice to produce documents issued under this legislation. 

 

Subsection 129AAD(2) deals with notices to practitioners and other persons.  Subsection 129AAD(7) prevents this notice to produce documents under section 129AAD from being given to the patient.  The definition of ‘another person’ does not include the patient (the person to whom the professional service was rendered) or the person who incurred the medical expense.  In itemising or providing details on an account for a professional service for which a Medicare rebate may be payable, the practitioner is stating that the requirements of the Medicare item have been fulfilled.  This is not a requirement that the patient (or the person who incurred the medical expense) is able to fulfil.  If the practitioner who rendered the service or on whose behalf the service was rendered causes an incorrect Medicare payment to be made, the amount that was paid incorrectly is recovered from the practitioner.  This ensures that the patient is not disadvantaged. 

 

Subsection 129AAD(3) provides that the CEO must give a person the opportunity to voluntarily comply with an audit request before a notice to produce documents under subsection 129AAD(2) can be issued.  This ensures that practitioners are provided with an opportunity to cooperate with Medicare Australia prior to a formal notice under the Act being issued.  It means that practitioners who choose to voluntarily tell Medicare Australia that they have received a benefit that exceeds the amount they should have been paid still receive discounts on any financial penalty that may apply.

 

Subsection 129AAD(4) provides that the notice to produce documents only applies to those service(s) which were rendered in the two years immediately preceding the date of the notice.  This effectively limits the scope of compliance audit activity under the provisions in this Bill providing more certainty for practitioners than currently exists.

 

Subsection 129AAD(5) describes what the person who is given a notice to produce documents may be required to do in response to a notice to produce.  The  CEO may require the person to produce the documents (or extracts or copies of the documents) that are relevant to substantiating the Medicare benefit paid in respect of the service(s) specified in the notice to the CEO or to an employee of Medicare Australia.  The relevancy test operates to ensure that once the person has provided information which substantiates the service, no further documents can be sought.  This means that practitioners will not have to produce all parts of a document, or all documents relating to a service, and only need to produce enough information to address the CEOs concern and substantiate the service.

 

The note to subsection 129AAD(5) describes the consequences if a practitioner (a person described in paragraph 129AAD(2)(a)) is given a notice to produce documents and they fail to comply with that notice.  A failure to comply with a notice may lead to Medicare Australia commencing recovery action for the Medicare benefit amount that has been paid in respect of the services specified in the notice (see section 129AC).  In addition an administrative penalty may also apply if the total amount of the services specified in the notice is above the threshold amount (see sections 129AEA, 129AEB and 129AEC).  A person described in paragraph 129AAD(2)(b) may be subject to a civil penalty if they fail to comply with a notice (see section 129AAE).

 

This legislation does not specify the actual document(s) that the person will need to produce in response to a notice.  It will be up to the person who receives the notice to decide what documents they have available to them to substantiate the service.  However if the person decides that it is necessary to provide documents containing clinical details to substantiate the service(s) specified in the notice, subsection 129AAD(6) provides that they may produce those documents to a medical practitioner employed by Medicare Australia rather than an administrative compliance auditor.  This provides the person with the opportunity to explain their concerns about the material to another medical practitioner recognising that individuals may be more comfortable providing clinical information to qualified medical practitioners employed by Medicare Australia, rather than administrative staff.  All medical practitioners employed by Medicare Australia are subject to the provisions of the Public Service Act 1999 and the secrecy provisions in the Health Insurance Act 1973 .

 

Subsection 129AAD(9) provides that the requirement to produce documents under this section includes the production of documents containing health information about an individual, within the meaning of section 6 of the Privacy Act 1988 that states:  

health information means :

(a)    information or an opinion about:

(i)       the health or a disability (at any time) of an individual; or

(ii)     an individual’s expressed wishes about the future provision of health services to him or her; or

(iii)   a health service provided, or to be provided, to an individual;

that is also personal information; or

(b)    other personal information collected to provide, or in providing, a health service; or

(c)     other personal information about an individual collected in connection with the donation, or intended donation, by the individual of his or her body parts, organs or body substances; or

(d)    genetic information about an individual in a form that is, or could be, predictive of the health of the individual or a genetic relative of the individual .

 

This includes relevant information from a patient medical record where necessary to substantiate the Medicare benefit paid in respect of the service.  This provision is needed because some Medicare items specify certain clinical actions which must be undertaken if a Medicare benefit to be payable in respect of the service.  The information needed to substantiate these services may only be contained in a patient’s medical record.  For example, some items require a blood pressure reading and a weight, height and BMI calculation to be made.  The only place this kind of information is likely to be located is in the patient medical record.   In these cases, the person will be required to provide an extract of that record to allow Medicare Australia to ascertain whether the item requirements were met and whether the Medicare benefit paid in respect of the service was correct. 

 

One of the intents of this legislation is to formalise existing voluntary compliance audit processes.  At present there is confusion amongst practitioners about the kind of information they should provide during an audit.  Consequently practitioners respond in a range of ways, with some refusing to cooperate, while others disclose health information and/or patient medical records which are not relevant to the concern being audited.  While the Privacy Act allows personal information to be disclosed to bodies such as Medicare Australia where that disclosure is reasonably necessary to protect the public revenue, many practitioners remain unclear about what their obligations are.  This legislation addresses this confusion, by making it clear that all practitioners (and other specified persons) must produce documents to substantiate a Medicare benefit paid in respect of a professional service when issued a notice under new section 129AAD.

 

Medicare Australia is working with stakeholders, including the Australian Medical Association, to develop guidelines for practitioners to provide examples of the kinds of information that will substantiate particular services or groups of services.  The provisions in this Bill do not commence until 1 January 2010 in order to allow for the development and publication of these guidelines.

 

Subsection 129AAD(8) provides that Medicare Australia must inform the person who is given the notice to produce documents that they are not required to produce documents containing clinical details unless these are necessary to substantiate the service.  The notice must also specify details of each professional service, including details of the item, date the service was rendered, the medicare number of the person in respect of whom the service was rendered and the reason(s) for the CEO’s concern.  To assist in patient identification, the notice may also include a patient reference number and/or a name.  In addition the notice will tell the person how the document is to be produced and the period within which, and place at which, the document is to be produced.  The person must be given at least 21 days to produce the document. Given the operation of subsection 129AAD(6) the person will be given the contact details of the compliance officer conducting the audit, as well as the contact details of a Medical Adviser.

 

This provision does not introduce any additional record keeping requirements.  Subregulation 9(1) of the Health Insurance (General Medical Services Table) Regulations describes the elements of a professional attendance for a broad range of Medicare attendance items.  Recording the clinical details of the service provided to the patient is one element of the professional attendance.

 

New section 129AAD is not limited by any other provision of the Act, the Medicare Australia Act or any other Act that relates to the powers of the CEO to require the production of documents (subsection 129AAD(10)).  Existing provisions which can be used to compel individuals to produce specialist referrals or diagnostic imaging or pathology records remain unchanged (sections 20BA,  23DK, 23DKA, 23DR and 23DS).

 

Section 129AAE Civil penalty — failure to comply with requirements in notice

 

Section 129AAE provides for a civil penalty if a person other than the practitioner who rendered the service or on whose behalf the service was rendered (the person referred to in paragraph 129AAD(2)(b)) is given a notice to produce under section 129AAD but fails to comply within the period specified in the notice.  The civil penalty is 20 penalty units for an individual (i.e. $2,200) and 100 penalty units for a body corporate (i.e. $11,000). 

 

This civil penalty provision is required to encourage third parties who might control relevant documents to comply with a notice to produce.  Examples where this may occur include corporatised medical practices that employ health professionals who provide Medicare services and hospitals where medical practitioners have rights of private practice.  It would not be acceptable to seek recovery of Medicare benefits from a practitioner and impose a penalty if that practitioner was unable to verify the Medicare benefit paid in respect of the service due to refusal by another party to provide relevant documents.  This compliance measure would also be unworkable if practitioners were able to establish corporate entities or structure employment arrangements in such a way as to avoid complying with the requirements of the proposed legislation.

 

Subsection 129AAE(2) also sets out the circumstances which constitute a defence to proceedings for the person (described at paragraph 129AAD(2)(b)) following a failure to comply with the notice.  It applies when the person fails to comply with a notice to produce documents because of the actions of another person (who is not under the control of the person described in paragraph 129AAD(2)(b) who is given a notice) or a non-human act such as a natural disaster, which could not reasonably have been anticipated.

 

The note to this section says that the person (described at paragraph 129AAD(2)(b)) bears the responsibility of establishing that a failure to comply with a notice given under new section 129AAD was due to circumstances described in subsection 129AAE(2).

 

Section 129AAF Self-incrimination etc.

 

New section 129AAF deals with self-incrimination.  Subsection 129AAF(1) provides that, if a notice to produce documents is provided to a person, that person is not excused from producing the documents on the basis that the production of the documents may tend to incriminate the person or expose them to a penalty.

 

The abrogation of the common law privilege against self-incrimination is necessary to ensure that the compliance measures contained in this Bill are able to operate effectively.  A very large amount of public money is expended under Medicare (over $14 billion in 2008-09).  Auditing activity is undertaken by Medicare Australia to ensure that this money is spent appropriately.  Many practitioners voluntarily comply with Medicare Australia requests for information.  However around 20% of practitioners do not cooperate and Medicare Australia does not presently have the power to require the production of relevant information.  This legislation will address that deficiency.  The provisions of this Bill will, when enacted, enable the Medicare Australia CEO to require the production of documents to verify whether an amount of Medicare benefit paid in respect of a professional service should have been paid.  Practitioners may be liable for financial penalties where the amount cannot be substantiated.  The new ‘notice to produce documents’ provision would not be workable if practitioners were able to resist notices by claiming privilege against self-incrimination.  Medicare Australia’s auditing ability would be severely compromised; the gap which this legislation aims to fill would remain.

 

A standard use and derivative use immunity provision will protect practitioners against other possible consequences of responding to notices to produce documents.  Subsection 129AAF(2) provides that the production of documents, and information obtained as a direct or indirect result of the production of documents in response to a notice under section 129AAD, cannot be used as evidence against the person in any criminal proceedings, other than for offences concerning false or misleading information or documents under the Act or the Criminal Code , or in any civil proceedings other than those arising under Part VIA of the Act (which deals with civil penalties).

 

Section 129AAG Medicare Australia CEO or an employee of Medicare Australia may deal with documents etc. produced

 

New section 129AAG describes what the Medicare Australia CEO is able to do with documents produced under the notice.  Subsection 129AAG(1) provides that the CEO may take any of the actions set out in subsection 129AAG(2) in order to ascertain whether the information contained in documents substantiates an amount paid in respect of a service.  This is a common provision in Commonwealth legislation dealing with notices to produce documents. 

 

The note to subsection 129AAG(1) describes the action that may result if the information contained in documents provided in response to a notice under new section 129AAD does not substantiate the Medicare benefit paid in respect of the service. 

 

Subsection 129AAG(2) allows the CEO to inspect the document, make a copy of, or take an extract from the document and retain the document, extract or copy for a reasonable period.  The CEO must provide a certified copy of the document as soon as practicable (subsection 129AAG(3)) to the person who provided the original document.  The certified copy will be received in all courts or tribunals as if it were the original (subsection 129AAG(4)).  Until a certified copy is supplied, the CEO must allow the person who provided the document (or a person authorised by that person) to inspect, make copies of, or take extracts from the document or extract (subsection 129AAG(5)).  This provides protection for practitioners if they mistakenly supply an original document rather than a copy or extract to Medicare Australia.  If this were to occur, this provision would require Medicare Australia to give the person access to the original document prior to arranging its return.

 

Documents produced under section 129AAD will be viewed by a limited number of specially trained and authorised staff; including medical practitioners employed by Medicare Australia who will be available to receive documents contain clinical details.  These authorised staff will be located in National and State or Territory offices.  Medicare Australia already has a conflict of interest policy that prohibits staff from being involved in compliance activities when they are acquainted with an individual connected to the audit.  Information will be stored in accordance with relevant legislation, current policies and Government requirements that safeguard personal information including the Privacy Guidelines for the Medicare Benefits and Pharmaceutical Benefits Programs issued by the Privacy Commissioner under section 135AA of the National Health Act.  Those safeguards prevent and detect unauthorised access and cover all facets of personnel security, physical security and IT security.

 

New section 129AAG is not limited by any other provision of the Act, the Medicare Australia Act or any other Act that relates to the powers of the CEO to deal with a document as described in subsection 129AAG(2) (subsection 129AAG(6)).

 

Section 129AAH Notice of decision: no amount recoverable because amounts paid substantiated etc.

 

Subsection 129AAH(1) provides that the Medicare Australia CEO must advise a person in writing when the documents they have provided substantiate the Medicare benefit paid in respect of the service.  This applies when the person has voluntarily cooperated with a request and when a person complies with a notice to produce documents under section 129AAD. This ensures that the person is advised of the outcome of the audit.

 

Subsections 129AAH(2) and (3) provide that the CEO must advise a person in writing when the CEO is satisfied that the documents are not able to be produced due to circumstances beyond their control as set out in subsection 129AC(1B), (1D) and (1F). 

 

Subsection 129AAH(4) provides that the notice of decision under 129AAH(1), (2) and (3) may include decisions about more than one specified service, including decisions relating to amounts which are owed to the Commonwealth referred to in section 129AAI.  This is important as some audits may involve more than one service.  This means that a notice of decision may contain different outcomes for the different services particularly where some services have been substantiated while others were not.  This provision therefore allows Medicare Australia to provide one audit outcome notice covering all the services that were audited, and the decision in relation to each of those services.

 

Section 129AAI Notice of decisions: amounts recoverable

 

Subsection 129AAI(1) provides that a person must be advised in writing when the Medicare Australia CEO decides to issue a decision notice claiming an amount that is owed to the Commonwealth under subsection 129AC(1), and new subsections 129AC(1A), (1C) and/or (1E).  This decision notice must include the reasons for the decision to claim the amount as a debt and information on how the person can seek internal review of the decision under new section 129AAJ. 

 

Subsection 129AAI(2) provides that the notice of decision under subsection 129AAI(1) may include decisions about more than one specified service, including decisions referred to in new section 129AAH.  The decision notice under subsection 129AAI(1) may be used to advise a person when the CEO is not satisfied that documents are not able to be produced due to circumstances beyond their control as set out in new subsections 129AC(1B), (1D) and (1F). 

 

Subsection 129AAI(3) provides that the validity of the decision is not affected if the person is not advised in writing of a decision under subsection 129AAI(1).  However until such time as the person is advised by the CEO of the intention to claim an amount as a debt due to the Commonwealth, the debt notice for that amount cannot be issued to the person.

 

Under subsection 129AAI(4) the CEO must wait 28 days after giving the person written notice of the decision under subsection 129AAI(1) before issuing a debt notice for the amount owed to the Commonwealth. This enables the individual who is affected by the decision to consider the outcome of the audit and if unsatisfied, seek a review of the decision under section 129AAJ.

 

129AAJ  Review of decision to claim amounts as debts

 

Section 129AAJ sets out the internal review process for decisions to claim amounts as debts.  Subsection 129AAJ(1) provides that where the Medicare Australia CEO makes a decision to claim an amount recoverable under subsections 129AC(1), (1A), (1C) or (1E) as a debt due to the Commonwealth from a person or an estate, that person or estate may seek internal review of the decision.  A request for internal review must be made in the form approved in writing by the CEO of Medicare Australia.  Administratively, the form will be given to the person or the estate when the notice is issued under subsection 129AAI(1) and will also be made publicly available by Medicare Australia through appropriate channels.  The person must apply for review within 28 days following notification of the decision (subsection 129AAJ(2)).  In practice the power to make decisions under the provisions in this Bill will be delegated to senior officers within Medicare Australia.  This means that the internal review powers under section 129AAJ will be exercised by the CEO or a delegate who will be a senior officer of Medicare Australia who is not involved in the compliance audit activity. 

 

Following application by the person, the CEO will review the decision and either confirm, revoke or vary it (subsection 129AAJ(3)).  The CEO must write to the person or estate with the outcome of the review within 28 days of the review application (subsection 129AAJ(4)).  Subsection 129AAJ(5) provides that the validity of the decision is not affected if the person or estate is not advised in writing of a decision within the 28 day timeframe, as required by subsection 129AAJ(4).  A decision under subsection 129AAI(1) may only be reviewed once (subsection 129AAJ(6)).

 

Item 3:

Item 3 makes clear that the new sections 129AAD, 129AAH and 129AAI will apply prospectively.  That is, the amended arrangements will only apply to professional services rendered on or after the commencement of the Bill on 1 January 2010.  This means that the Medicare Australia CEO will not be able to issue a notice to produce documents under new section 129AAD, or issue a decision notice under new sections 129AAH or 129AAI, in relation to any service that was rendered prior to the legislation commencing.

 

Item 4: 

This item inserts eight new subsections after subsection129AC (1).

 

Subsection 129AC(1A) deals with failure to produce documents in respect of one or more services specified in a notice under new section 129AAD.  If a practitioner (the person who rendered the service, or on whose behalf a service was rendered, as described in paragraph 129AAD(2)(a)) is required by a notice to produce documents in respect of a specified service (new section 129AAD) and the person does not comply with the requirement, the Medicare benefit amount paid in respect of the service is recoverable as a debt due to the Commonwealth from the person, or the person’s estate, whether or not the amount was paid to the person.  For example, if a person receives a notice to produce under new section 129AAD and the notice specifies 20 services, but the person only provides documents in relation to 12 services, then the Medicare benefit amount which has been paid in relation to the remaining 8 services becomes a debt which is recoverable from the person or their estate.

 

Subsection 129AC(1C) deals with an amount not properly substantiated.  This relates to   situations where a practitioner (a person described in paragraph 129AAD(2)(a)) complies with a notice to produce a document in respect of a service (new section 129AAD) but the information in the document does not substantiate the Medicare benefit amount paid in respect of the service.  In these circumstances, the amount which cannot be substantiated is recoverable as a debt due to the Commonwealth from the practitioner or the practitioner’s estate (if that practitioner has died after the notice has been given).  The amount which is not substantiated may be the whole amount or it may be the difference between the amount paid and the Medicare service which has been substantiated by the documents provided by the person.  The amount is recoverable from the practitioner who rendered the service (person described in paragraph 129AAD(2)(a)) whether or not the amount was paid to that person because their actions caused an incorrect Medicare amount to be paid.

 

Subsection 129AC(1E) deals with an amount not properly substantiated.  This relates to situations where a notice to produce documents is given to a person described in paragraph 129AAD(2)(b), who is not the practitioner who rendered the service, and that person complies with the notice.  Subsection 129AC (1E) provides that if the relevant documents do not substantiate (wholly or partly) the Medicare benefit amount paid in respect of the service, the Medicare benefit amount which is not substantiated is recoverable as a debt due to the Commonwealth from the practitioner (the person who rendered the service, described in paragraph 129AAD(2)(a)) or their estate.

 

Subsections 129AC(1B), (1D) and (1F) provide that the new subsections 129AC(1A), (1C) and (1E) do not apply if the person (the practitioner) satisfies the CEO that the non-compliance with a notice to produce under new section 129AAD, or the failure to substantiate the Medicare benefit paid in respect of the professional service, is due to circumstances beyond the control of the persons described in paragraphs 129AAD(2)(a) and (b).  This is intended to address circumstances such as if documents have been destroyed during a natural disaster, or some other circumstance not caused by the person. 

 

Subsection 129AC(1G) describes what occurs when a person is given a notice of liability to pay an administrative penalty under section 129AEC and the person does not pay the penalty by the date set out in the notice.  Under these circumstances the amount is recoverable as a debt due to the Commonwealth from the person or the person’s estate.

 

Subsection 129AC(1H) provides that a Medicare benefit amount paid under the Act can only be recovered once under section 129AC.

 

The notes to subsections 129AC(1B), (1D) and (1F) refer readers to new section 129AAJ which deals with the internal review of decisions to claim an amount as a debt due to the Commonwealth.

 

Note 1 replaces the heading to section 129AC with ‘Recovery of amounts overpaid etc. and administrative penalties’, to properly reflect the revised content of the section.

 

Note 2 inserts a new subheading ‘False or misleading statements’ to subsection 129AC(1).

 

Item 5:

This item adds reference to new subsections 129AC(1A), (1C), (1E) and (1G) to the end of paragraph 129AC(2)(a).  This extends the current provision for liability for interest on amounts under existing subsection 129AC(1) to amounts due as debts under new subsections 129AC(1A), (1C), 1(E) and (1G) .  The item also inserts a new heading, ‘Interest on amounts’ to subsection 129AC(2).

 

Item 6:

This is a machinery amendment to include ‘and’ at the end of paragraph 129AC(2)(a).

 

Item 7:

This item repeals the existing subsection 129AC(4) and substitutes a new subsection 129AC(4).  It allows the person and the Medicare Australia CEO to agree to an arrangement whereby a debt can be recovered from future payments that Medicare Australia may make to that person.  This facility is only available where the Medicare benefits paid in respect of professional services are assigned to the practitioner under existing section 20A of the Act, and both parties agree to the arrangement.  The ability to enter such an agreement is contained in existing legislation but is further clarified by new subsection 129AC (4).

 

Item 8:

This item is an application and savings provision.  It applies new subsection 129AC(4) to the amounts recoverable under subsection 129AC(1) of the Act before, on or after the commencement of this item (1 January 2010).  In addition, if a person has an existing agreement in force to pay an amount to the Commonwealth immediately before the commencement of this item, the arrangements under that agreement will continue unless the person withdraws from the agreement.

 

Item 9: 

This item inserts new sections 129AEA, 129AEB and 129AEC after section 129AE. 

 

Section 129AEA Liability for administrative penalty

 

Under subsection 129AEA(1) a practitioner (the person described in paragraph 129AAD(2)(a)) is liable for an administrative penalty in respect of a Medicare benefit paid in respect of one or more services rendered by them or on their behalf, if:

·          the Medicare Australia CEO has given the person a notice claiming a debt due to the Commonwealth under subsection 129AC(1); and

·          the notice specifies the total amount recoverable amount in respect of the service(s); and

·          the total amount is more than $2,500 (or a higher amount if prescribed by the regulations).

 

Paragraph 129AEA(1)(c) provides that the total amount cannot include debts that became due more than two years prior to the notice under 129AC(1) being given to the person.

 

Practitioners (persons described in paragraph 129AAD(2)(a)) who make voluntary admissions and/or cooperate with an audit process will not be given a notice to produce documents under new subsection 129AAD.  Under subsection 129AC(1), if a person makes a false or misleading statement which results in an amount paid in respect of a service exceeding the amount that should have been paid, the excess amount is recoverable as a debt due to the Commonwealth.  This will remain unchanged.  However, the new subsection 129AEA(1) allows an administrative penalty to be applied to amounts which total more than $2,500 (or a higher amount set by regulations). 

 

An analysis of Medicare Australia data indicates that this threshold reflects the point at which mistaken claims may become routine, or reflective of poor administration or decision making In 2008-09, only 22% of practitioners who were found to have made incorrect claims were asked to make repayments of more than $2,500.  The ability to adjust the threshold by regulations will ensure that practitioners are not disadvantaged by incremental increases in the value of Medicare benefit amount paid in respect of services.  The regulations may only increase the threshold amount; regulations cannot be used to decrease the threshold amount.

 

Subsection 129AEA(2) provides that a practitioner (the person described in paragraph 129AAD(2)(a)) is liable for an administrative penalty in respect of a service if:

·          the CEO has given the person a notice to produce document under new section 129AAD; and

·          the person has incurred a debt to the Commonwealth under new subsections 129AC(1A) or (1C) in respect of one or more services specified in the notice; and

·          the CEO has given the person a notice under new subsection 129AAI claiming an amount as a debt due to the Commonwealth; and

·          the total amount that may be recovered in respect of the service(s) specified in the notice is more than $2,500 (or a higher amount if prescribed by regulations).

 

Subsection 129AEA(3) provides that a practitioner who rendered a particular service, or on whose behalf a particular service has been rendered (described in paragraph 129AAD(2)(a)), is liable for an administrative penalty in respect of the service if:

·          the CEO has given another person (described in paragraph 129AAD(2)(b)) a notice to produce documents under new section 129AAD relating to one or more services; and

·          the other person has complied with the notice under new section 129AAD but the information provided does not substantiate the amount paid in respect of the service(s) (subsection 129AC(1E));

·          the CEO has given the practitioner a notice under new subsection 129AAI claiming an amount as a debt due to the Commonwealth; and

·          the total amount that may be recovered from the practitioner in relation to the services specified in the notice is more than $2,500 (or a higher amount if prescribed by regulations). 

 

The administrative penalty applies to the practitioner who rendered the service or on whose behalf the service was rendered (described in paragraph 129AAD(2)(a)) where an amount is recoverable as a debt due to the Commonwealth because another person (described in paragraph 129AAD(2)(b)) has provided documents which do not, or do not wholly, substantiate the amount paid in respect of the service(s) identified in the notice and rendered by the practitioner (new subsection 129AC(1E)). 

 

Section 129AEB Amount of administrative penalty

 

Subsection 129AEB(1) describes how the administrative penalty in respect of a service is calculated. 

 

Subsection 129AEB(2) provides that the base penalty amount is 20% of the amount which is recoverable in respect of the service under paragraph 129AEA(1)(b), (2)(e) or (3)(e) as applicable.  The base penalty amount may be increased or decreased subject to subsections 129AEB(3), (4), (5), and (6).  When more than one service is identified in a notice to produce documents under new section 129AAD or a debt notice under subsection 129AC(1), the administrative penalty will be calculated for each service where the Medicare benefit amount exceeded the amount (if any) that should have been paid.

 

Subsection 129AEB(3) provides that a person’s base penalty amount for a professional service is reduced as follows:

·          100% if the practitioner voluntarily tells Medicare Australia, in the approved form, that an amount paid in respect of a service exceeded the amount that should have been paid.  This information must be provided before the Medicare Australia CEO makes a request for documents or gives the practitioner a notice to produce documents under new section 129AAD.  This addresses instances where a practitioner contacts Medicare Australia to admit that they have caused an incorrect Medicare benefit amount to be paid in respect of a service.  At present some practitioners contact Medicare Australia and make an admission following publication of the National Compliance Program which describes the specific risks Medicare Australia will be investigating during the year;

 

·          50% if Medicare Australia asks the practitioner to voluntarily provide documents to substantiate a Medicare benefit paid in respect of a service and the practitioner voluntarily tells Medicare Australia, in the approved form, that an amount paid in respect of a service exceeded the amount that should have been paid.  This information must be provided before the CEO gives the practitioner a notice to produce documents under new section 129AAD (item 2 of the table); and

 

·          25% if the CEO gives a notice to produce documents under new section 129AAD to the practitioner and, before the end of the period specified in the notice, the person tells the CEO, in the approved form, that an amount paid in respect of the service exceeded the amount that should have been paid (item 3 of the table).

 

Subsection 129AEB(4) provides for a 25% increase in the base penalty amount if a practitioner does not provide any response to a notice to produce documents given under new section 129AAD (other than where the person has satisfied the CEO that the non-compliance is due to circumstances beyond their control (new subsection 129AC(1B)).  

 

Subsection 129AEB(5) applies a 50% increase in the base penalty amount for the latest professional service specified in a notice to produce under new section 129AAD, if in the previous 24 months the CEO has:

·            given one or more other notices to the practitioner under new section 129AAD specifying other professional services; or  

·            served a notice on the practitioner claiming an amount as a debt due under subsection 129AC(1); or

·            given to another person one or more notices under new section 129AAD specifying other professional services that were rendered by, or on behalf of the practitioner;

and the total amount of the sum of the previous debts (recoverable amounts plus base penalty amounts) is more than $2,500 (or a higher amount if prescribed in regulations).

 

For example, if a practitioner receives a notice under new section 129AAD in respect of 20 services totalling $3,000 and fails to substantiate any of the specified services, then they would be liable to repay the Medicare benefit amount ($3,000) and the base penalty amount of 20% of $3,000 ($600) so the total amount payable would be $3,600. 

 

However if a practitioner receives a notice under new section 129AAD in respect of 20 services totalling $3,000 and fails to substantiate any of the specified services, and the in the previous two years the practitioner has been given a notice under subsection 129AC(1) and/or a notice under new section 129AAD, and/or a notice has been issued to another person under new section 129AAD in respect of services rendered by the practitioner, and the total amount of those combined notices is more than $30,000, then the base penalty increases by 50%.  This means the practitioner would be liable to repay the Medicare benefit amount ($3,000) and a base penalty amount of 30% (base penalty amount 20% x 50% increase) of $3,000 ($900) so the total amount payable would be $3,900. 

 

Subsection 129AEB(5)(c) provides for the $2,500 threshold to be adjusted in the future to make sure that practitioners are not disadvantaged by incremental increases in the value of the Medicare benefit amount paid in respect of services.  The regulations may only increase the threshold; the threshold cannot be decreased by the regulations.

 

Subsection 129AEB(6) provides that if both the 25% increase in the base penalty amount and the 50% increase in the base penalty amount apply to a debt, then the 25% increase is applied first, followed by the 50% increase

 

Subsection 129AEB (7) provides that if a base penalty amount is subject to both a reduction and an increase, the reduction is applied first.

 

Section 129AEC Notice of administrative penalty

 

New section 129AEC provides for the Medicare Australia CEO to issue a written notice to a person who is liable for an administrative penalty.  The notice of administrative penalty will include the administrative penalty relating to each professional service specified in the notice to produce issued under new section 129AAD and/or in the debt notice issued under existing subsection 129AC(1) as well as the total amount of the administrative penalty.  The notice of administrative penalty may also separately include the Medicare benefit amount paid in respect of a service which is being recovered as a debt due to the Commonwealth under section 129AC.  This will mean that Medicare Australia is able to provide a practitioner with one notice listing both the debt amount and the base penalty amount owed to the Commonwealth

 

Item 10: Application 

This item provides for the application of the administrative penalty provisions (new sections 129AEA, 129AEB and 129AEC of the HIA).  These new sections apply in respect of professional services rendered on or after the commencement of those sections (1 January 2010).